Wednesday June 5th

5-06-2019

US stock futures trim gains after big ADP jobs report miss

U.S. stock index futures gave back some of their gains on Wednesday after the release of much weaker-than-expected jobs data. Dow Jones Industrial Average futures traded 63  points higher, indicating a gain of 72 points at the open. Dow futures pointed to a gain of more than 170 points earlier. S&P 500 and Nasdaq 100 futures also trimmed gains. Private payrolls increased by just 27,000 in May, according to data from ADP and Moody’s Analytics. Economists polled by Dow Jones expected an increase of 173,00 jobs. May’s print was the worst since March 2010. Treasury yields fell on the news. The benchmark 10-year yield traded at 2.09% while the 2-year rate hit its lowest level since December 2017. The weak data added to the concerns that the economy was slowing while the U.S. takes a tough stance on trade with key partners like China and Mexico. Still, the major indexes were set to build on Wall Street’s second best day of trade for 2019 as the U.S. central bank hints at looser monetary policy while trade fears were assuaged.  Stocks that were the biggest losers during the sell-off that began in early May were among the biggest winners in premarket trading Wednesday. Nvidia shares climbed 2.2% while Caterpillar traded 0.8% higher before the bell. Apple shares gained 1.7%. CEO Tim Cook said China had not targeted the tech giant despite the recent escalation in U.S.-China trade tensions. The Dow surged more than 500 points on Tuesday after Federal Reserve Chair Jerome Powell signaled hat the central bank was open to easing monetary policy. Powell stated that the Fed would be keeping an eye on current developments in the economy, and would do what it must do, in order to “sustain the expansion. ” Powell did, however, note that the central bank could not determine when or how global trade issues would be settled. Equities around the world were also boosted by easing trade fears. Several Republican lawmakers have noted their opposition to new tariffs on Mexican imports while some have hinted at the possibility of blocking such levies. Meanwhile, Treasury Secretary Steven Mnuchin is scheduled to meet with People’s Bank of China Governor Yi Gang this weekend. This would be the first in-person meeting between key trade negotiators from the U.S. and China. Stocks in Asia gained ground during Wednesday trade, following an overnight rally on Wall Street. Japan’s Nikkei 225 jumped 1.80% to close at 20,776.10. The Topix index also gained 2.07% to end its trading day at 1,530.08. Over in South Korea, the Kospi rose 0.1% to close at 2,069.11. Mainland Chinese stocks ended the trading day largely unchanged, shedding earlier gains. The Shanghai composite and Shenzhen component were close to flat at about 2,861.42 and 8,746.05, respectively. The Shenzhen component rose slightly to approximately 1,494.77. Hong Kong’s Hang Seng index rose more than 0.2%, as of its final hour of trading. Oil prices resumed their slide on Wednesday, dragged down after an unexpected gain in U.S. inventories but with losses capped by a recovery in global equities on hopes of a U.S. Fed rate cut. Brent futures were down 41 cents at $61.56 a barrel around 8:30 a.m. ET (1230 GMT). U.S. West Texas Intermediate crude was down 81 cents, or 1.5%, at $52.67 a barrel. U.S. crude inventories rose unexpectedly last week, while gasoline and distillate stockpiles built more than expected, data from the American Petroleum Institute showed on Tuesday. Gold prices rose 1% to a more than three-month high on Wednesday as trade tensions induced safe-haven demand and increased bets on a cut in interest rates by the U.S. Federal Reserve. Spot gold was at $1,337.97 per ounce, having clocked its highest since Feb. 21 at $1,338.34 earlier in the session. U.S. gold futures gained 1.1% to $1,342.80 an ounce.